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Lot size one: small quantities, big benefits

Lot size one refers to a small quantity (‘one’) of goods ordered for delivery on a specific date or manufactured in a single production run.

Today’s consumers – both in B2C and B2B contexts – don’t want ‘one size fits all’. They buy custom Nike trainers and furniture made on demand. Firms ask their suppliers for branded packaging and tailor-made services, and they want it delivered at the right time – the time that suits them best. As a result, companies that want to stay ahead of the curve have to swap their ‘one size fits all’ processes for a ‘lot size one’ approach. A logistical nightmare? Not necessarily!

Opportunities in every industry

The demand for a wider range of variants and more personalized products and services is not limited to specific sectors. The obvious examples are fashion and high-tech, but there are huge opportunities in other industries too, such as chemicals and fast-moving consumer goods. A brand of cleaning products, for example, can order customized sponges. Packaging is increasingly tailored as well, as manufacturers of consumer goods deliver their pallets to stores instead of to the retailer’s central depot.

The higher the quantity, the lower the cost of each item, right? Not if you count the cost of inventory, lack of flexibility and inability to meet customer needs.

No need for a big bang

The central idea of ‘lot size one’ is that you’re able to produce any product, in any variant, in any quantity, in any sequence and on any assembly line – at any time. Does that imply rewriting your business model or invest big in the newest technology? It doesn’t have to, and it definitely doesn’t have to happen overnight.

You could, for example, produce modular products or a basic product in large quantities and then customize these further down the supply chain. Alternatively, rely on subcontractors to take care of the customization. Tools with embedded forecasting optimization or multi-echelon inventory capabilities are also a big help, as are advanced supply chain solutions, data analytics, robotics, IoT and 3D printing. Yet again, you don’t need big investments or complex implementations to start your journey towards ‘lot size one’.